These Greater Baltimore banks packed the most punch on PPP
Baltimore Business Journal - 12/09/20 | Written by: Holden Wilen
Big banks provided the most money to businesses in Greater Baltimore through the Paycheck Protection Program, but community banks packed more punch relative to their size, according to a Baltimore Business Journal analysis of federal government data.
M&T Bank far and away dominated the competition by winning approval for more than $1 billion in PPP loans for businesses in Greater Baltimore, more than double its closest competitor, according to the U.S. Small Business Administration. Truist Bank, PNC Bank, and Bank of America were also among the top four. Wells Fargo, the region's fifth-largest bank, was the only one to not make the top five for PPP dollars, ranking No. 10 with $89.96 million.
Combined, the five big banks have 81% market share for deposits in Greater Baltimore. It's not surprising that the banks that dominate the region were the largest lenders. However, throughout the PPP process, there were signs that community banks outperformed. By comparing the PPP output of banks with the amount of deposits they have, regional and small banks rise to the top of the list.
The Business Journal analyzed banks’ PPP activity by comparing the amount of deposits they hold in Greater Baltimore to the total amount of their PPP loan approvals on behalf of businesses in the region. The resulting ratio provides a measure of which lenders were most responsive to local businesses in a time of crisis. The lower that dollar amount is, the more active a bank was in originating PPP loans given its deposit level.
JPMorgan Chase & Co. was No. 1 using the metric. For every $1.29 in Greater Baltimore deposits, the bank scored $1 in PPP loan approvals. Chase's ranking largely reflects how new the bank is to the local market. The financial giant opened its first branch here in late 2019 and had about $45 million in local deposits as of June 30. However, Chase has had commercial operations in the region for a while longer and has infrastructure befitting the biggest bank in the U.S.
Shippensburg, Pennsylvania-based Orrstown Bank, ranked No. 4. It gave out the ninth-highest amount of PPP loans, despite being the 19th-largest bank by deposits. Chris Holt, the bank's Maryland market president, said in an email Orrstown is "extremely proud" of its performance. He described an "all-hands-on-deck" approach and said working on PPP was "rewarding."
"We know that meaningful relationships are built and fostered during challenging times," Holt said. "The pandemic has created a challenging operating environment which, to us, means we need to do everything we can to make a positive difference."
- JPMorgan Chase - $1.29 in local deposits for every $1 in PPP loan approvals. The bank has $45.2 million in local deposits.
- Capital Bank - $1.87 in local deposits for every $1 in PPP loan approvals. The Rockville-based community bank has $39.9 million in local deposits.
- FVCbank - $2.60 in local deposits for every $1 in PPP loan approvals. The Fairfax, Virginia-based bank has $26.2 million in local deposits.
- Orrstown Bank - $4.03 in local deposits for every $1 in PPP loan approvals. The bank has $399.6 million in local deposits.
- PeoplesBank - $4.49 in local deposits for every $1 in PPP loan approvals. The York, Pennsylvania-based bank has $341.1 million in local deposits.
- First-Citizens Bank & Trust Co. - $5.42 in local deposits for every $1 in PPP loan approvals. The Raleigh, North Carolina-based bank has $79.5 million in local deposits.
- Harford Bank - $5.61 in local deposits for every $1 in PPP loan approvals. The Aberdeen-based bank has $361.5 million in local deposits.
- Sandy Spring Bank - $6.12 in local deposits for every $1 in PPP loan approvals. The Olney-based bank has $2 billion in local deposits.
- Essex Bank - $7.33 in local deposits for every $1 in PPP loan approvals. The bank, a subsidiary of Richmond, Virginia-based Community Bankers Trust Corp., has $174.8 million in local deposits.
- First National Bank of Pennsylvania - $7.90 in local deposits for every $1 in PPP loan approvals. The Pittsburgh-based bank has $1.9 billion in local deposits.
- Fulton Bank - $7.91 in local deposits for every $1 in PPP loan approvals. The Lancaster, Pennsylvania-based bank has $1.3 billion in local deposits.
- Cecil Bank - $9.26 in local deposits for every $1 in PPP loan approvals. The Elkton-based bank has $20.9 million in local deposits.
- Howard Bank - $9.70 in local deposits for every $1 in PPP loan approvals. The biggest Baltimore-based bank has $1.7 billion in local deposits.
- The Harbor Bank of Maryland - $10.76 in local deposits for every $1 in PPP loan approvals. The Baltimore-based, Black-owned bank has $265.9 million in local deposits.
- ACNB Bank - $11.33 in local deposits for every $1 in PPP loan approvals. The Gettysburg, Pennsylvania-based bank has $328.95 million in local deposits.
The big banks ranked much lower on the list. M&T was No. 25 with a ratio of $19.84. Truist was No. 23 with a ratio of $19.03. PNC ranked No. 26 with a ratio of $20.76. Bank of America was No. 32 with a ratio of $73.12 and Wells Fargo was No. 34 with a ratio of $97.
Overall, the analysis included 38 banks. The metric is not perfect since it doesn't include banks with commercial offices in the region but no retail branches. It also does not include credit unions or account for the size of banks’ commercial and business lending operations prior to PPP.
The numbers do confirm, though, that many banks went above and beyond to pump out PPP applications when businesses were relying on them.
Mary Ann Scully, CEO of Howard Bank, admitted she's biased since she believes her community bank was among those that "went above and beyond," but said objective data shows community banks outperformed by disproportionately participating in the $659 billion Covid-19 relief program.
"It was a big commitment," Scully said. "When we decided to go into this we told our board we would probably be putting close to 100% of our capital at risk in a brand new product with a government party in a 15-day period of time. Not your traditional risk management."
Howard early on focused on its existing customers, though it was loose with its definition. The bank also took 40% of its staff at the outset and had them working on nothing but PPP loans applications.
"I think that human interface really helped to get a lot of things done," Scully said.
The bank also decided to provide assistance for any customer that asked, rather than "playing God" in determining the need for individual businesses. Howard Bank also "tried to underwrite for forgiveness" so customers would not be caught in a situation where they are saddled with unexpected debt if the loan is not forgiven. PPP loans are forgivable if most of the money is spent on payroll costs.
Harford Bank President Michael Allen said community banks took their role "personally." Unlike Howard, Harford Bank accepted applications from non-customers. About half of the bank's 940 total PPP loans went to non-customers.
"It will be interesting to see how history looks back at this whole program and what the difference was," Allen said. "A lot of our customers, with whom in many cases we've had life-long relationships, were facing incredible economic adversity. We were watching dreams potentially being shattered over and over again. Our folks took this personally and I'm very proud of this team. We have a bunch of overachievers here."